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News/Business. Ali Velshi. CNN anchors break down the financial news of the week. New.

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America 13, Washington 11, Paul Ryan 10, Us 7, U.s. 7, London 5, Mexico 3, New York 3, Georgia 3, D.c. 3, Christine Romans 2, Carl Levin 2, Motrin 2, United States 2, Christine 2, Joe Biden 2, Cain 1, Cnn 1, The United States Postal 1, Johnny Isakson 1,
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  CNN    Your Money    News/Business. Ali Velshi. CNN anchors  
   break down the financial news of the week. New.  

    March 17, 2013
    12:00 - 1:00pm PDT  

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to see it through. they compromise at times on what they're willing to put into it to grow the fish faster. brian doesn't do that. he doesn't compromise the quality of the product. that's very important to us. >> the path we're going down is not just about fish. my vision is for farming different organisms in the ocean. i am really interested in algae and marine plants, macroalgae, lower energy requirements, no fertilizer, freshwater. i think we can be very efficient growing these crops in the ocean while using all of the resources our agriculture uses today. in time, we'll see an evolution. i don't know when, but we'll see off shore producing a product to feed the world. >> could you imagine doing anything else? >> no. >> absolutely not.
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>> no. i have this passion for the ocean. i love the challenge and the opportunity to work in the ocean. work with fish offshore, develop infrastructure. every aspect of it is fascinating to me. i love the hatchery because that's where i started, and i love that side of the business, and creating something from almost nothing. being a fish farmer is really not a job. it's more like a lifestyle. it's our lives. our lives personally and professionally are very much intertwined. i feel fortunate not to have to wake up, go to a 9:00 to 5:00 job, fortunate that it's something i enjoy doing and wake up and think, i get to go to work. >> brian's passionate about the potential of the ocean as a source of food, but we put brian on the next list because he's a
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visionary and he's using his talent to bring a critical food resource to the world. where others see obstacles, he sees opportunities. his determination might just steer the centuries old business in a new direction. for more on brian and other agents of change, check us out online, follow us on twitter, like us on a facebook. also join me on my live stream. i'm dr. sanjay gupta. thanks for watching. after almost four years of not having a budget, house republicans and democrats have now put forward a new proposal. that news, neither one of them will ever pass. both sides of the aisle are digging their heels deep into the dirt with these budgets, but the nonpartisan congressional budget office won't even look aat them because they're so vague. here is patty murray on the democratic budget. >> the senate budget reflects
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the pro growth, pro middle class agenda that the american people went to the polls and supported last november. >> both of these budgets have names, by the way. the senate democrats foundation for growth budget is the first resolution the democrats have put out in about four years. it would curve spending and reduce deficits enough to stabilize the debt but not balance the budget in ten years time. now here's what the house republicans propose. >> our budget will provide economic security. it will guarantee a secure retirement for seniors. it will expand opportunities for the young. >> paul ryan's latest edition of his path to prosperity isn't too duff than other versions. he plans to drastically curb spending, reform the tax code what increasing revenue and actually reform the budget in ten years, and the president is way behind his february 4th
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deadline to put forth a proposal and he doesn't have much time left. >> my goal is not to achieve a balanced budget just for the sake of balance. my goal is how do we grow the economy, but america back to work? >> america doesn't really have a budget right now, it has a continual resolution, which is an extension of an earlier budget. that expires on march 27th. if government goes beyond that without a patch, they could shut down. we're supposed to have an actual budget resolution voted on and in place by april 15th, but we're way behind on that. on may 18th, we're set to hit the debt ceiling. some say that could be the showdown. i want to bring in nancy, with the "new york times." andy, let's start with you. both sides put budgets out. everybody knows that neither of these budgets are going
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anywhere. what happens next? >> so, essentially, we're going to go through the same sort of continuing resolution process that you have seen over the last couple years. as you pointed out these budgets are political documents. they'll probably both pass their respective houses, but there's almost no way to bridge the gap between them and they're very vague documents. again, these are kind of political postures, then we're going to go through the slow process of getting money through the resolution. >> the budgetary process is not supposed to be a political process, necessarily. sure, it's the government priority, but it's a fairly technical process where everybody tries to come together and hammer it out. when people say things, and nancy, they did this a lot. everybody has been putting forth budgets and they're failing. these are not really budgets. these are vague. can you tell us where the middle ground is? how do we get to a budget? >> the tricky part is both parties have fundament aal
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disagreements about how we should raise money for the central government, through taxing people, and how to spend money. the middle ground would be some sort of agreement on those two things, but as we saw in the year end fiscal cliff deal, just coming to a deal to extend 80% of the 2001-2003 tax cut was a huge list and done at the last minute, and these are huge disagreements that the parties still have. >> the clock is still ticking. can we expect to see a budget from the president that will appeal to both parties? from what he has been saying, it doesn't sound like they're anywhere close to what nancy just described? >> no, and the budget is going to put out a budget in early april, and regardless of its content, republicans are going to oppose it fundamentally because they will oppose anything the president puts forward. we're going to see an appropriations process that funds the government at current levels, including probably the sequester. it seems like both parties have kind of agreed that's the path
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forward. they're going to start looking at cuts to entitlement programs, start looking at reducing tax expenditures and we're going to have to fight where cutting that money is going to go to, whether it's bringing down tax rates or reducing the deficit further. >> nancy, we're going to talk about it later in the show, but the fact is the business world, the housing world, seems to be ignoring what is going on. but in fact on march 27th, we could have a shut down, come may 18th, if we don't have a budget, we could reach the debt ceiling again. >> i think congress will come to some sort of agreement next week before they take a two-week recess to keep on being the government. they will pass a continuing resolution this week. i don't think that's going to be a big issue. the question sort of moving forward is what is going to be the sounding the debt ceiling.
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part of the president's outreach to republicans is to remind them he has put on a table about $400 billion in cuts to medicare and medicaid as well as about $130 billion in a shift in the way we calculate federal benefits. i think the contours of a deal will come, if it does come at all, around the debt ceiling date and the months leading up to it. >> nancy, good to see you, and andy lowry, the economic policy reporter at the "new york times." >> paul ryan calls his budget the path to prosperity. mitt romney hoped it would be the path to the presidency, but that didn'twork out. ryan will not be deterred. >> i'm proud of our budget because it's changed the conversation. today, we're not talking about cliffs or ceilings or sequesters.
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we're talking about solutions. that's how it should be. >> forget democrats. could paul ryan be dealing with anger from his own party? i'll ask one of the startest business minds next. >> during the break, tweet me, let me know if you think it's time for republicans to move past the ryan budget, or do you think with the election aside, it's obama and the democratic who need to move. to the globaln we call the internet of everything. ♪ it's going to be amazing. and exciting. and maybe, most remarkably, not that far away. we're going to wake the world up. and watch, with eyes wide, as it gets to work. cisco. tomorrow starts here. for those nights when it's more than a bad dream, be ready. for the times you need to double-check the temperature on the thermometer, be ready.
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you're thinking of the 1.6 million daily customer care interactions xerox handles. or the 900 million health insurance claims we process. so, it's no surprise to you that companies depend on today's xerox for services that simplify how work gets done. which is...pretty much what we've always stood for. with xerox, you're ready for real business. here we go again, another budget from paul ryan, another lightning rod for democrats to attack the gop's economic proposals. remember when mitt romney picked paul ryan to be his running mate? we predicted then it would turn a spotlight on paul ryan's budget proposals and we were right. joe biden and president obama wasted no time using it to bludgeon the gop nominees. >> romney said, quote, it was marvelous, and that had he been president if it passed, he would sign it. now, that same budget, the ryan budget, the "new york times" in the past called him, i quote,
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the most extreme budget plan by a house of congress in modern times. >> i want to bring in republican senator johnny isaacson of georgia, not only a senator, but a former businessman and a member of the senate finance committee, good friend to the show. senator, good to see you again. thank you for being with us. >> great to be here. >> paul ryan's budget is similar to the one he proposed last year you just heard joe biden criticizing. and by the way to the one that came up the year before. every time paul ryan releases a budget democrats call it a voucher program that will saddle seniors with extra costs. under paul ryan's plans, americans who turn 65 in 2024 or later would choose between private health insurance plans or they can stick with their traditional medicare options. they'd get a subsidy from the federal government to put toward the cost of their premium. the first year, the subsidy would cover the cost of the second least expensive private plan or the medicare option, whichever is cheaper. in later years the subsidy would go up based on a competitive bidding process.
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senator, paul ryan pitched his proposals to voters in last year's election and the republicans lost. why do we keep bringing up something that doesn't seem to be getting public support? >> first of all, we did a bad marketing job a year ago in the election. let me talk to you about what i think we should be saying. first of all, you acknowledge anybody 55 years or older is preserved for medicare as they know it today. those younger will go to a new program of premium support which allows the government to control the cost and the growth rate in medicare much better than fee for service reimbursement and preserved medicare for future generations. this is a question of do you want to preserve medicare or lose it, because if we do nothing, medicare will be gone in the not-too-distant future. >> it is a tough sell because the reality is in order to preserve it, someone's going to get cut and that is going to open you up to criticism from democrats who say that while you've got a proposal that is going to reduce some taxes on wealthy american, we're cutting people on medicare. in fact, if the ryan budget were
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to become law, wealthy americans would get a sizable tax cuts, there would be two tax brackets, 10% and 25%, instead of the current seven we have. low-income americans wouldn't be affected by that. some middle-income americans would benefit. but according to the left-leaning citizens for tax justice, the average millionaire making more than $3 million would pay $203,000 less in taxes if they give up all their tax breaks. if they don't, they pay $345,000 less. so senator, the problem with the proposal is he doesn't say where he'll make up for the lost revenue. where do you get a sense the cuts are going to come from? >> well, in terms of the budget that was proposed by the house of representatives, cuts are coming primarily or savings are coming primarily from reform of social security, medicaid, and reform of medicare as well as cuts in discretionary spending, moving some of them away from defense and other areas of government.
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the difference in the two budget, the ten-year prospect of that passed in the house of representatives is $41 trillion spending over ten years. the senate budget, which was just approved thursday night by the senate budget committee, spends $46 trillion. so you've got two differences. the senate is trying to spend more. house republicans are trying to be more efficient. >> let me ask you this, senator. president obama is trying a new strategy. he's reaching out to congress, holding meetings on capitol hill. i don't understand why these weren't happening 18 months ago. but there's a shift from the campaign-style events we've seen over the last month. listen to something he said to george stephanopoulos earlier this week. >> i'm trying to create an atmosphere where democrats and republicans can get together and try to get something done. but ultimately it may be that the differences are just too wide. if their position is we can't do any revenue or we can only do revenue if we gut medicare or gut social security or gut medicaid. if that's the position, then
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we're probably not going to be able to get a deal. >> probably not going to be able to get a deal. is it still possible to bridge the partisan divide now that republicans and democrats are really having to line up behind their very different, as you pointed out, very different budget proposals? >> first of all, he said it may be that we can't cross the divide. he said "may." that's an iffy reference. yesterday in the luncheon, i was sitting two people away from the president when he was asked the question about the quote on stephanopoulos' program and he said i want to look at this as a problem we can solve rather than a problem we can't solve. republicans don't want to raise tax rates but expenditure reform like simpson-bowles, that produces revenue. as long as the president addresses entitlements, there's a possibility to make a deal. there will have to be sacrifice, a different approach, be positive attitudes. but i underline the word he used was "may," meaning we could do it. i hope we will do it. >> you are an optimist, senator. that's why i like having you on the show. you're a businessman and one of
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i think eight senators who supported simpson-bowles. so if you're optimistic about it, then so i am. senator johnny isakson from georgia, and he is part of the senate finance committee. thank you for being with us again. >> thanks, ali. coming up, despite washington's dysfunction, we're experiencing something of an economic renaissance in this country. i've been saying it for months. if you need more convincing, now the economist is on board. it says america's growth prospects are much brighter than they seem. why? i'll tell you next on "your money." matt's brakes didn't sound right... ...so i brought my car to mike at meineke...
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if you watched the show before, you've heard me say this before -- america is a runner on the road to an economic renaissance. the housing market is coming back. nationally prices rose more than 7% last year. domestic energy boom under way, extracting record amounts of oil and gas from shale rock from fracking, hydraulic fracturing, and other technology. that's pushing down prices for natural gas, used in part to generate electricity. that helps utilities and heavy industry compete and that creates more jobs for americans.
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the jobs picture is improving. first-time unemployment claims are falling back to prerecession levels. last to the u.s. economy added 236,000 jobs. 36th month of consecutive private sector job growth. there is real reason for optimism. but i've also warned you about this -- dysfunction in washington threatens to trip our runner, the u.s. economy, just as it struggles to gain speed. which way is this thing going to go? christine romans is the host of "your bottom line." edward mcbride is the washington, d.c., bureau chief for the economist. ed, welcome to the show. you have written a special report on america's competitiveness and you're with me on this. you say we should cheer up from infrastructure to education to immigration, despite glaring problems where you are in washington, the outlook is less bleak than pessimists maintain. make your argument. >> that's absolutely right. the special report goes through all the areas where there's usually a lot of handwringing about how america is doomed to decline, education, infrastructure, as you
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mentioned, a host of others, and basically looks at the arguments there and discovers that they're very much exaggerated, that there's reason for optimism. and generally the reason people are pessimistic is because they focus too much on what's going on in washington, d.c., where nothing is going on, right, sort of political gridlock, and focus too little on what's going on in the rest of the country and in cities and states around the country, governors, mayor, state legislators are looking at these problems and coming up with encouraging creative solutions to the sorts of things that we're used to thinking can't be fixed in america. >> christine, take ed's point that if we paid less attention to washington we might be more optimistic. even if we ignored washington, every renaissance has its risks. what else are they other than washington? >> in america we've been worried about the risks to the american dream since about 1492, right? this is what we do. we fret about the american dream and model. a lot of people look at the stock market and say this is an
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example of this renaissance we're on the verge of, the storm stock market at report highs, but there are a lot of folks who say, look, the reason they're at a record high, three little letters, f-e-d, the fed. listen to what jim rogers said this week. >> if you give me a trillion dollars, i'll show you a good time, too. they're throwing money out the window out to the markets and it's going somewhere. >> so let's think about that for a minute. how much of this renaissance is being driven by the fed in the short term? talk about the longer-term investments we need to have a true american renaissance in the next century but in the short term many say renaissance is really federal reserve stimulus into the economy. >> at least that part that is the stock market, that part that is the housing market, but ed, this week treasury secretary jacob lew visited a seaman's plant in georgia to get a first-hand look at what he sees as the manufacturing
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renaissance. >> i think if you look at the job creation numbers over the last year, 18 months, it's been clear that we've seen steady growth in manufacturing jobs. you're here today in a facility that has -- is proof that there is a bright future to american manufacturing. >> ed, here's the thing our viewers need to know. manufacturing output is actually up after years of declines, up for the last few years. it's not actually resulting in proportionate growth in manufacturing jobs in america, which is what most of my viewers will be interested in hearing. are we getting jobs out of this? >> well, you have to, as christine just did, separate the short term and the long term. the special report that i've written attempts to look at the long term. i think in the long term the prospects are very good. you know, america is in this incredibly competitive position regarding energy, very cheap natural gas, which is one of a big input for lots of industries. you know, that helps with manufacturing. america's education system is being turned upside down in a way that i think people don't realize. a whole series of reforms, you
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know, from how teachers are paid, what the curriculum is, how students are tested, all of this is changing. insfru structure, another one. we're always worried about how the federal government doesn't have enough for insfru structure, and at the moment, doesn't, that's rights. but if you look around the country, public/private partnerships, new forms of trust to channel private investment into infrastructure, we're finding ways to deal with these problems that the u.s. has at the moment. and in a few years that should pay off. >> music to my ears. ed mcbride, washington bureau chief with the economist. thanks for joining us. christine romans is the host of "your bottom line." she'll be back later in the show. this ship is the latest pr headache for carnival. but travelers are still booking trips on the high seas. coming up next, i'll tell you if investors are jumping overboard. and could this finally be it? the device that dethrones apple as the king of smartphones? i'm still a blackberry guy. but this new gadget has my attention. revolutionizing an industry can be a tough act to follow,
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if a business were to lose $6 billion of shareholder money because of a bad trade and then tries to hide it by manipulating its results, one might expect the ceo of that company to be shown the door. that is not the case with jp morgan and its ceo jamie dimon. he didn't even testify in two days of hearings this past week in front of a senate investigation subcommittee. that committee led by senator john mccain and senator carl levin spent nine months investigating what has come to be known as the london whale trade that led to those $6 billion worth of losses for the bank. the london whale refers to a former trader in jpmorgan's investment office in london who made a series of risky trades. carl levin said the bank ignored the risk. >> it exposes a derivatives trading culture at jpmorgan, the piled on risk, the hidden losses, that disregarded risk
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limits, that manipulated risk models, that dodged oversight and that misinformed the public. >> to be fair, dimon took a 50% pay cut last year and accepted some responsibility for the losses. but the lack of oversight inside big banks more than four years after the financial crisis has to make you wonder if anything has changed. banks are now required to hold more capital in their books to brace themselves from financial losses. this week the federal reserve approved the capital plans of 16 of the nation's 18 largest banks as part of the final leg of their so-called stress test. only two banks failed those tests, allied financial and bbt. the federal reserve asked jpmorgan and goldman sachs to resubmit their plans later this year for further review. still, there are plenty of critics out there that say banks are still too big and unwieldy. remember this guy? >> i'm not in favor of breaking up the large banks.
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but if push comes to shove and there is no other way to eliminate the too big to fail problem, which is getting worse, not better, has not improved since the crisis began, i would be in favor of breaking up the banks. >> richard is back with me. more than four years after the financial crisis, banks are still clearly behaving badly. is history doomed to repeat itself? >> yes! it's simple! i mean, we have to put up with the banks because we need them because they lubricate the economy. but they are not lovable creatures designed for the philanthropic good of man and beast. the only way forward is either very strong directorate management from the top or regulation. i'm afraid the former has been seen to fail so it's the latter that has to succeed. >> all this about the london whale, a $6 billion trading
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loss. it begs the larger question of what kind of financial regulations have been put into effect since the crisis, what kind of real oversight is there. that particular issue of the london whale, by the way, it was absorbed completely by the bank's profits. it didn't pose a threat to the overall -- >> it could have done. the argument against that is that if it had become systemic, we were lucky in that case it wasn't, but if it had we would have been victims. >> that aside, there are a lots of people who say banks are a great investment right now. should this nonsense worry you? should you be concerned? >> the banks have small, well capitalized medium tier banks. >> don't be confused with whether it's a good investment with whether or not public policy dictates they should be retrained, constrained, or broken up. that's two different arguments. one is what's good for your pocket book. the other is what is good for the economy. >> we're still fighting about banks the same way we were fighting about them four years
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ago. we could have had this conversation four years ago. >> let's talk tech. the samsung galaxy s-4 burst onto the scene this week. getting mixed reviews. no word on the price. but it should be available to all major cell phone carriers in the next couple months. one big draw features the latest android operating system, a five-inch screen, big,ut you can see it clearly, a pixel display as good as any smartphone you'll see these days. at cnnmoney.com, we have the complete specs and a review. but look at the market. my beloved blackberry is somewhere in that other category. apple has 21%, that makes it the king because sam sung has a lot of product, and a variety of others make up the rest, including my beloved blackberry. >> it's a sliver in the category. >> a nokia isn't even mentioned by name. >> biggest player in the world. does the this device, which by the way you can use your eye to do things with, can charge wirelessly, sounds neat, does this become number one not just
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by numbers but by mind share? >> also a pedometer. you could be looking at -- but here's what is really interesting. so at the road show for this, there's all this criticism today about whether it was maybe kind of sexist. can we roll the video? it was a little weird. someone told me it was the cross between a broadway show and a "star trek" convention. they were coming out with this new item, this new device. bizarre song and dance, women drunk up as drunken housewives, apparently. reporters who didn't exactly know what it was all about, i guess. >> what do you think, richard? >> do not confuse bad taste with sexism. >> i'm just saying it's weird. i'm not saying it's sexist. >> these launches have taken on a life of their own. flash mobs and stuff. i couldn't care less. >> remember the old cars we used to go to with the beautiful women? >> my, my. my word, it's so big.
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>> but the point is do we think samsung has a product -- let's just move on from this conversation. test it out yourself. let's talk about another pr disaster. >> before you get to that, how do we know if it's going to be number one? because if we did know we would not be sitting here talking to you. >> that's right. i'd be flying to you to my yacht from my helicopter. not on a cruise ship, though. another disaster for carnival cruise lines. the carnival dream turned out to be a nightmare, generator problems, reports of overflowing toilets again, although i've heard that being disputed. made it to port in st. maarten, not a bad place to get stuck. the cruise will not continue. passengers have been flown back to florida, a three-day refund and a coupon for half off on a future cruise which i'm sure they'll be in a big hurry to book. and now word the legend is having trouble maintaining speed. take a look at carnival's stock price over the last three
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months, having trouble maintaining speed as well. engine room fire crippled a ship in the gulf of mexico in february, called the triumph. christine, you say cruises are the fast food of travel. what does that mean? >> that means they're available to anybody. everybody can get a bite of the big mac that is a carnival cruise ride. this is the only way a lot of people in america will see the world. right? if you're a family with $55,000 a year, two kids, $100 a day for four days, going to be able to see cozumel or parts of mexico and the caribbean. this is a very efficient way for people to get a lot of calories with a little bit of cost. >> i love them, they're great fun. take it on its own terms. you enjoy what's there. >> you can travel with other people who don't want to do the same things that you do. like sit by the pool and eat. >> in that order. >> it shows, doesn't it? >> enough of our own personal travel delights and desires. as for carnival, this really depends on whether or not it's a run of bad luck or what we
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journalists call dog bites charges, you hear one then another then another but it's really no worse than normal or is there something systematically wrong. with the company. >> and watching the chairman at a miami heat game, he owns that team, when several thousand people were on that horrible cruise tells me -- >> no different from tony hayward of bp being on his sailing ship at the time of the gulf of mexico disaster. >> but he lost his job and there's no indication mickey aaronson loses his. >> stay right where you are. the dow has had its longest winning streak in more than a decade. markets are hot, helping the rich get richer. i want to know what you think. tweet me now @alivelshi. does a record-breaking stock market help everyone even if you're not invested? when we come back, richard and i will do a little q & a. this is sabra hummus, a guide to good dipping.
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it is time for a little q&a. my good friend richard quest, host of "quest means business" on cnn international. welcome. good to see you. we've been talking about this, markets on a tear, the dow with it's longest winning streak in more than a decade. i think both of us agree bull market or not, most people should stay invested in stocks for the long haul and take advantage of market movements. but to help build wealth you have to do it that way. here in the united states, almost half of all people surveyed by gallup say they have no exposure to the stock market. the next question is, does a record-breaking market help everyone? i'll go first. >> for a change. >> for a change. give me 60 seconds from the ring of the bell. all right, richard. the answer is a resounding yes. in the united states, 47% of americans do not invest in stocks so almost half the country has a gain directly from
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the dow's almost 8,000-point climb since the lows on march 9th of 2009. the broader s&p 500 and the even broader wilshire 5,000 are in record territory as well. this is driven, as christine said, in large part by the fed. historically low interest rates mean that outside of buying a home, which takes time and a lot of capital, the stock market is the only game in town if you want to build wealth unless you'd rather rob a bank or marry a rock star. but even if you're not invested in the stock market, a record market creates wealth, it spurs investment, it encourages spending, and hence it creates jobs, so while it doesn't benefit everyone equally, stock markets do trickle down, and more importantly it's accessible to more people than those who simply choose to invest. do i have more time? two seconds. if you don't play, you can't win. [ bell ] go for it. >> how i wish just once you
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would actually answer the question in an educated and informed way and not go for the jugular. the only answer is yes and no. >> that's definite. >> of course the stock market benefits everyone through their 401(k) plans that they're invested in, through the wealth effect, through improved corporate profitability, through the consumer confidence numbers. yes, the rising tide does lift all boats. but if it was only that simple. unfortunately, you know and i know even if ali velshi doesn't know, it is not that simple because in an era when so many people who are directly invested in stocks are showing double-digit gains, it is those poor at the bottom who will never get a chance to get that sort of wealth that quite rightly say they are not involved. the only problem is it is the only game in town. >> yeah. that's the problem. on that we agree.
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richard, always good to see you. richard quest, the host of "quest means business" on cnn international. i was in texas last week and one of that state's most powerful politicians told me it's true, everything is bigger in texas, including job creation and economic growth. should the rest of the country adopt the texas miracle? that's next on "your money." i work for 47 different companies. well, technically i work for one. that company, the united states postal service® works for thousands of home businesses. because at usps.com® you can pay, print and have your packages picked up for free. i can even drop off free boxes. i wear a lot of hats. well, technically i wear one. the u.s. postal service®, no business too small. no they don't. hey son. have fun tonight.
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you're thinking of the 1.6 million daily customer care interactions xerox handles. or the 900 million health insurance claims we process. so, it's no surprise to you that companies depend on today's xerox for services that simplify how work gets done. which is...pretty much what we've always stood for. with xerox, you're ready for real business. americans have been fighting about taxes since this country began. remember the phrase no taxation without representation? fast forward to 2013, still arguing about taxes. there's a conventional wisdom that lower taxes are best, generally promote economic growth. one of the toughest things to project is the real effect taxes have on the economy. increases and decreases never happen in a vacuum. take a look at the top tax rates since 1950. after world war ii, the top tax rate was more than 90%. right now the top tax rate in this country is 39.6%. the argument that we pay really high taxes historically doesn't
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hold up. in the meantime, the economy saw its fair share of ups and downs. this chart shows gdp on a yearly basis, those years extending down were recessions. the average growth rate since world war ii is a respectable 3.25%. we'd be very happy to have that today. i spoke with the lieutenant governor of texas, david dewhurst this week in austin. he's probably the most powerful man in texas and the most powerful lieutenant governor in the country because he writes the legislation, controls the budget and is head of the texas senate. texas has been trying to lure companies away from california and other states with the promise of lower taxes and lighter regulation, something people are calling the texas miracle. >> we're 48th out of 50 states in per capita state spending. we've kept our taxes low. we're 47th out of 50 states in per capita state taxes. over the last ten years i've cut taxes over 51 times and expect a 52nd and a 53rd this year.
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and we've worked real hard, had the lightest regulatory hand we possibly could. so when businesses look at texas, we want to make it irresistible to come into texas, invest, create new jobs, which creates new sales tax revenue for the state so we can make yet further cuts in our taxes. eduardo porter is a columnist at "the new york times." will cain, you've seen him before here, a cnn contributor. eduardo, lieutenant governor dewhurst, is he right? should washington take a page out of texas' book? >> well, the claim that lower taxes will produce economic growth has been tried at the national level for years. i mean, since the reagan administration. and, in fact, we don't really have any good evidence that it has worked, that low taxes do stimulate higher economic growth. i would suggest the evidence does not really support the
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>> by that same logic, lower taxes lead to economic growth. you suggest you node the exact place to pinpoint that where it diminishes. >> at 100%, it will probably diminish your effort, but moving from 35% to 40%, that will have a lot of impact on your decision to work, not to work. >> we can then go into the things the lieutenant governor talked about and look at the different state and who is benefitting from economic growth. >> texas has certain other advantages. they have oil. it is also benefitting from the fact the state doesn't need to collect those state taxes because they get money from the local government, and cities have high property taxes. >> that's true. i read an article -- >> called the blessing of low
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taxes. >> that's right, and other countries across the world, but if you look at this at a more domestic level, democracy between the federalch here, you see the chief executive ranks of the top ten magazines for growth, where they would like to locate their businesses, it's not just it is indiana. states across the south. top ten are led by peoe -- republicans who, the more important points, are pursuing these policies like low taxes and low rgs. rgs. >> will, you're from texas. governors have to get their revenue from somewhere and that's where the true tax picture in texas gets more mud ld. cities in towns across texas levee some highest property taxes in the country because they get so little revenue from the state. i challenged lieutenant
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government on that but he stuck to his guns. >> our whole economy from a state perspective is driven by consumer confidence and right now that's high because people know that we're not going to raise taxes and we're going to keep this state pro-growth and friendly to business coming in, investing and creating new jobs. >> this is a conversation we have a lot on this show because investing has just been a bad word to use lately. what if you did think of your tax money, whatever amount that is, as an investment. things that will reward generations who may get stuck paying the bill. >> the question is who is a better steward of your dollars. is there a third party -- call that the government -- who's in a better position to spend your money than you are. i think economic history has proven the answer is no. >> who a going to build the equivalent of a new highway system? who's going to improve -- >> it's not an argument for
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anarchy or no anarchy. it is not an argument for taxes. >> is the stuff that we agree to do together -- >> that's a very popular line. >> you quoted it. do you agree there is a role for tax money to be used for those purposes? >> absolutely. and i also agree that tax policies don't exist in a vacuum. whether that's low regulation or somewhat strong infrastructure. those things all matter. the point is taxes matter as well and texas is the proof. >> but i would like to revert to what you mentioned earlier, the comparison across countries. we have extremely low burdens compared to every other advanced nation in the world. around 40 years ago we were roughly the same. a quarter of our economy in taxes. right now pretty much every other country has moved to 35% and we've stuck the 25%. that hasn't hurt their growth relative to ours. we're roughly at the middle of
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the table. there are things the governments can do with the money that or government has not done. >> conversation will go on for many, many months and possibly years. coming up -- you heard me warn before of an economic storm but my next guest says silicon valley is at risk of being hit by a typhoon. under attack by your government. there's a reason no one says "easy like monday morning." sundays are the warrior's day to unplug and recharge. what if this feeling could last all week? with centurylink as your trusted partner, it can. our visionary cloud infrastructure and global broadband network free you to focus on what matters. with custom communications solutions and dedicated support, your business can shine all week long.
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you've heard how the forced spending cuts could hurt the u.s., longer lines at airports, fewer food inspectors on the job, but the cuts aren't just an immediate threat, they'll also hurt the u.s. over the long term. u.s. government funds over 60% of basic research and
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development in the united states. federally funded research and development faces a $12.5 billion cut this year according to the information technology and innovation foundation. that will result in about 200,000 job losses. economic output will be reduced by 2$203 billion by 2021. the small business administration faces a 5% cut, which means around $4 billion less for small businesses that depend on government contracts and the sba has less money to mentor entrepreneurs and help them compete for those government contracts. founder and ceo of reputation.com is -- i think you are the youngest crow on the fix the debt commission. >> i think so, yeah. >> you have said that when a butterfly flaps its wings in washington, d.c., there is the potential of an economic typhoon in silicon valley. tell me what that means. >> that's a very important question. look, when congress is not able